I am looking for some advice regarding my employment status as a free-lance scientific editor and teacher currently trying to set up in Spain, and how I might best move forward should I wish to register myself as self-employed in the UK or as an incorporated company in the UK (or indeed if its better to do so in Spain, and what my liabilities are). I'll try to explain my situation a bit more clearly now...Thoughts and suggestions welcome!

I was a PhD scientific researcher in the UK and abroad for years, but now for various reasons I have decided not to continue with that type of work directly. I currently live in Spain, and I do some freelance teaching and general editing/consulting in English, and more specifically for scientists/medics etc. with English as a second language, who require very high levels of “scientific English” for their publications. I'm trying to drum up more business in this area and make it my profession. I am also searching for a part time but fixed English teaching job in a language school which will provide me with a basic income while I get the editing business going. If I find something with a contract they will register me in the Spanish social security system and I will be liable for tax and social security payments, which may or may not cause a problem with the free-lance side of my work.

I would like to build a personal business from my science editing (and possibly private teaching). I have looked into the possibility of registering as “autonimo”, the equivalent of UK self-employed in Spain, so that I can gain access to a range of potential customers in universities etc. who will require me to bill them before I can be paid. There are problems with this however: firstly I will be liable to pay 230EUR/month for Social Security + whatever tax I owe on what I’ve earned, and this is regardless of whether or not I earn that much in a month or not (currently my editing income is significantly less). A contact in the Spanish government tax offices has told me that one solution is to register here only for one or two months and to declare all the work have done over a longer period as if it were done only in those months I was registered, then pay the tax and social security on that lump sum, and later de-register for some months. However this is inefficient, leaves bills and payments lingering and requires me to lie on those bills about when the work was done, so I don’t like this option. Secondly, if I did register “autonimo”, and also worked in a school, I would then be paying my Spanish social security twice, and according to English friends of mine in similar situations here, there is no way to re-claim the double payment back from the government, thoguh I'm not sure about that.

I am already in a situation where I have done some editing work, but I cannot be paid for that work since I am unable to bill as “autonimo”, and if I do register, I will lose money on the transaction. I wonder if it is possible for me to bill using my UK national insurance number?

I had taken other advice that it would be best if I managed all my tax and social security affairs through the Spanish system since I currently live here and so it would be more "official" (or perhaps less complicated), in the case that either the UK or Spanish governments decided to "audit" my affairs. However, I now wonder whether it is feasible (and legal) for me to operate my freelance activities abroad as either a UK sole trader with a registered trade mark, or as a registered limited company in the UK (registered to a residential UK address)? According to advice that Companies House gave me, it is possible to incorporate a limited company and live abroad, providing you have a registered office address in the UK. This would also have the advantage that I could keep my “company” as one entity rather than separate ones that I would have to change if I move to another country (for example, to improve my chances of gaining a supplemental income through English language teaching) or if I return to the UK.

Moving to another country is feasible, since the “company” that I propose would have no physical presence, except for me, and a lot of work would come through and be completed through email correspondence. I also anticipate that work will come not only from Spain, but probably globally. This raises the issue of income, which will be primarily Euros with the possibility that payments could come from the USA, UK, China and maybe other countries, in a variety of currencies. Does this make my situation any more complicated, or is it simply a case of converting the currency through the bank or asking for payment made in my currency of choice or through Paypal? Is it even strictly necessary to have a separate business bank account, and would that be have to be in the UK or in Spain? I think it is unlikely that my services would be considered as a “permanent Establishment”, so I don’t think the laws pertaining to PE’s this would kick in, but I’d be grateful for further advice on this too.

I am aware that I can make voluntary NIC and Student Loans payments, and have looked at the rules outlined on the HMRC website, although paying myself through a PAYE system could be useful if I gain a more steady income. I am also aware that there are European laws that, in theory, prevent double taxation, but it seems that this could be difficult to avoid unless I carefully plan and administer my work, and for this I think I will require an accountant, or a solicitor? I'm also seeking advice (in the case that I am able to legally operate out of the UK) on whether it would be better for me to operate as a sole trader or as a limited company? Although I know that incorporating would effectively protect me from personal bankruptcy whereas a registered sole trader does not enjoy this protection, I think there are similar laws allowing the offsetting of company expenses against income for both UK sole-traders and UK Ltd. Companies? However, would these rules would still pertain to me if almost all my expenses are in Spain? It is certainly possible to make the case that it is useful for me to be abroad to gather and do the work, both for freelance teaching, and editing. Also I’m not sure what types of records I would need to keep and how best to keep them, although I think I only have to make one Tax return to the UK per year? I know here in Spain registered companies are required to make a return 4 times a year, and tax is around 25%.

I think I have explained my situation, I know its a lot of information, but I've trued to be complete. I can certainly provide any information I have omitted, I'm getting to the point where I don't know what to do or where to go next to get this going, and I don't want to give up at the first hurdle! Thanks a lot!!!